UK government says Microsoft and AWS unfairly dominate the cloud market

Digital clouds against a blue background.

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UK cloud market dominated by AWS and Microsoft, CMA says
Britain’s cloud sector “is not working as well as it could be”
Amazon contests the provisional findings

After launching its investigation into the UK cloud market in 2024, the Competition and Markets Authority (CMA) has initially declared both Microsoft and Amazon are unfairly dominating the scene.

The CMA says the two companies’ effects on the sector are therefore impacting competition, leading to higher costs, reduced choice, less innovation and poorer service quality for UK businesses.

This is big news for an island nation that spent £9 billion on cloud services in 2023 – a figure that continues to rise 30% annually.

CMA says Amazon, Microsoft dominate UK cloud market

Early provisional findings from the CMA inquiry found Amazon and Microsoft each have a share of “up to 40%” of UK customer spend on cloud services – considerably more than Google, in third place.

Similar to other recent European findings, the CMA determined technical and commercial barriers make it challenging for customers to switch providers, but moreover, other cloud service providers and startups are faced with large capital investment requirements and other barriers that prevent them from challenging the hyperscalers.

“Our provisional view is that competition in this market is not working as well as it could be," noted Kip Meek, chair of the CMA’s independent inquiry group.

Matthew Sinclair, Senior Director of not-for-profit trade association CCIA, said: “Unfair licensing terms for legacy software, such as office suites, are costing UK users a fortune. The CMA needs to move quickly to act on its finding, and to address a longstanding barrier to choice for users of certain cloud providers.”

Sinclair added Britain benefits from “healthy competition” in other IT sectors, including new AI investments.

Google, which isn’t unaffected by the scope of the investigation, responded. Its VP for Customer Engineering EMEA at Google Cloud, Chris Lindsay, commented: “We will continue to engage constructively with the CMA to support openness, innovation, and growth for the UK cloud market. Restrictive licensing harms UK cloud customers, threatens economic growth, and stifles innovation, and we are encouraged that the CMA has recognised the harm of these practices."

An AWS spokesperson added: “The proposed intervention under the Digital Markets, Competition and Consumers Act 2024 (DMCCA) is not warranted. The evidence demonstrates the IT services industry is highly competitive. Cloud computing has lowered costs for UK businesses with on-demand services and pay-as-you-go pricing, expanded product choice, and increased competition and innovation.”

They continued: “But we urge the CMA to carefully consider how regulatory intervention in other areas will stifle innovation and ultimately harm customers in the UK.”

We have not yet heard from Microsoft with regard to the CMA findings, but have contacted the company for comment.

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With several years’ experience freelancing in tech and automotive circles, Craig’s specific interests lie in technology that is designed to better our lives, including AI and ML, productivity aids, and smart fitness. He is also passionate about cars and the decarbonisation of personal transportation. As an avid bargain-hunter, you can be sure that any deal Craig finds is top value!